European Stock Exchange Strengthens, Investors Waiting for Inflation Direction
European stock exchanges are likely to open stronger on Tuesday. However, investors are not yet completely calm. The market is still waiting for eurozone inflation data to read how far the US-Iran war has shaken energy prices.
Launching a report by CNBC, Tuesday, June 2, the Stoxx 50 futures contract rose 0.6 percent at 06.30 London time. Futures reflect the estimated direction of the market before the exchange opens.
The British FTSE 100 futures contract rose 0.3 percent. The French CAC 40 rose 0.1 percent, while the German DAX added 0.5 percent. All four are major European stock indexes.
The rise came after the pan-European Stoxx 600 index fell to a one-week low on Monday. Market expectations of an end to the war in Iran have faded.
CNBC reported that the initial eurozone inflation data for May was the main market concern on Tuesday. This data is important because it will show the impact of the Middle East conflict on oil, gas, and living costs in Europe.
Eurozone inflation in April has jumped to 3 percent. A month earlier, inflation was still 2.6 percent. The figure is well above the European Central Bank's (ECB) target of 2 percent.
Europe is vulnerable to energy shocks because it is a net importer of energy. This means that the region buys more energy from outside than it produces itself. When oil and gas prices rise, pressure quickly enters the cost of industry, transportation, and households.
According to data from LSEG, a London-based global financial market data provider, the market is pricing in a 94 percent chance the ECB will raise its benchmark rate by 25 basis points at its meeting later this month. A basis point is a unit of interest rate change. A total of 25 basis points is equal to 0.25 percent.
The attitude of US President Donald Trump added to market anxiety. On Monday, Trump told CNBC that he did not care if peace talks with Iran failed.
"I really don't care. I really don't care," Trump said. He also called the long negotiations "starting to get very boring."
In addition to the US-Iran war, European investors are monitoring the Russia-Ukraine war. Moscow launched a massive air attack on a number of Ukrainian cities on Tuesday morning.
Last week, NATO and European Union officials slammed Russia after one of its drones accidentally hit an apartment building in Romania, near the Ukrainian border.
The European Union is now preparing a 21st package of sanctions against Moscow.
A number of other economic data will also be released in Europe on Tuesday. Among them are Switzerland's trade balance, Spain's unemployment figures, and UK mortgage lending data.